Method and Apparatus for Online Buyer Oriented Reverse Auction System

ABSTRACT

Methods and apparatus are described for facilitating transactions between a plurality of buyers and a plurality of sellers via the Internet. Product information relating to a plurality of products meeting product criteria specified by a group of buyers is presented via the Internet. Buyers place requests for products at desired levels. The mechanism automatically aggregates the buying power and bundles it for sellers to bid on. The present invention provides an easy B2C/B2B mechanism for sellers as well as a mechanism for buyers to benefit from wholesale prices.

FIELD OF THE INVENTION

The present invention relates to the use of networked systems forimplementing an on-line buyer-oriented reverse auction system for thepurchase and selling of goods and services between a plurality of buyersand a plurality of sellers.

BACKGROUND OF THE INVENTION

With the increasing popularity of the Internet, computer-based systemshave become an extremely popular method for buying and selling a varietyof products. Most of the web sites are seller-oriented. The common waysof selling are either seller fixes prices such as Amazon.com or sellsthe item from auction site such from Ebay.com. In both cases, buyers areforced to purchase at the fixed price or bid with each other to get theproduct at higher price. Online comparison shopping services start toshift the power from seller to buyer. Buyers begin to benefit fromcomparison and are able to find product at lower price.

Buyer oriented web sites such as priceline.com gives buyers anopportunity to name their own price (U.S. Pat. No. 5,794,207). Thebusiness model focuses on facilitating a transaction between a buyer andat lease one of a plurality of sellers. It is time consuming for sellersto look at every small offer coming in. Buyer does not get wholesaleprice benefit since buyer is dealing with seller alone.

Ariba Inc has been granted a patent named “Facilitator for AggregatingBuyer Power in an On-Line Market System” (U.S. Pat. No. 6,584,451). Themethod is to offer sellers an interface to submit seller schedule andbuyers use buyer's interface to bid. The more buyers coming in, thelower the price it will be for the buyers. This approach is still selleroriented since sellers initiate the bidding process. There is nocompetition between sellers.

Thus, a method and an apparatus are needed to aggregate the buyer powerand reverse the bidding process.

BRIEF DESCRIPTION OF THE DRAWINGS

The subject matter which is regarded as the invention is particularlypointed out and distinctly claimed in the claims at the conclusion ofthe specification. The foregoing and other objects, features, andadvantages of the invention will be apparent from the following detaileddescription taken in conjunction with the accompanying drawings.

FIG. 1 is a block diagram of an online buyer oriented reverse auctionsystem for carrying out this present invention.

FIG. 2 is a block diagram illustrating trading cycle for product auctionin this system.

FIG. 3 is a block diagram of using matching criteria to match ordersfrom order queue and bids from bid queue.

FIG. 4 is a table diagram summarizing the activities of buyer, sellerand facilitator in three different phases.

DETAILED DESCRIPTION OF THE PREFFERED EMBODIMENT

The present invention is a method and apparatus for facilitating theaggregation of buyer power via the Internet or similar networks. It isalso a method and apparatus for sellers to sell products in a wholesalemanner.

In one preferred embodiment of the invention, buyer oriented on-linereverse auction system consists of a product-browsing interface 110 withproducts database 120, a buyer interface 130, a seller interface 140 anda facilitator 150 to implement the method introduced in this invention.A server system is configured as Web Server providing access toinformation such as web pages in HTML format via the HyperText TransportProtocol (http). The server system is also configured to generatecookies and to transfer the cookies to the Client System with Buyer andSeller use. Buyer 160 uses an IBM PC compatible operating the MicrosoftWindows operating system to access buyer interface 130. Seller 170 alsouses an IBM PC compatible operating the Microsoft Windows operatingsystem to access seller interface 140. Both buyer 160 and seller 170have access of the product-browsing interface 110.

The biding process has endless trading cycles 210. Each cycle consiststhree phases: buyer phase 220, buyer seller phase 230 and seller phase240. Trading cycle is set by the system depending on products. Cheaperor popular products which circulate faster are set with shorter cycle.In one preferred embodiment of the invention, a trading cycle lasts aweek. The cycle starts from buyer phase on Friday each week. Buyer phaseends on Tuesday. Buyer seller phase starts on Wednesday and ends thesame day. Seller phase starts on Thursday and ends the same day. Anothernew cycle starts on Friday.

In buyer phase 210, Buyers use the product-browsing interface 110 toresearch products they are interested in. The system collectsinformation on products, which includes barcode or ISBN number, retailprice, specification and price trend chart. All the information is savedin the product database 120. In one preferred embodiment of theinvention, product-browsing interface 110 provides barcode or ISBNsearch so that they uniquely identify the product. It causes noconfusion between buyers and sellers. Once a buyer decides on whatspecific product to buy, he/she uses the buyer interface 130 to submitthe buying request that includes request price, units and expirationdate. Buyer set request price depending on the retail price that ispublished by the product-browsing interface. In one preferred embodimentof the invention, request prices are set at levels based on retailprice, such as 95%, 90%, 85%, 80% . . . , Expiration date can crossbeyond a plurality of trading cycles. Buyer is able to change request atanytime in buyer phase. Request can be added, modified or removed. Buyeralso has access to the trading history of this product so that the priceset by buyer is reasonable. All requests are sorted based on price anddate when request is submitted. Higher request price and earliersubmission means better position in the queue. Better position meansbetter chances to get product at lower price. This method encouragesbuyer to submit reasonable request price earlier in the buyer phase. Atthe end of buyer phase, each request is granted a position which willnot change through the trading cycle.

In buyer seller phase 220, buyers' requests are converted to ordersautomatically. An order is not allowed to be removed. New orders arestill accepted. The position of new order starts from the last positionfrom buyer phase. Buyers can only increase request price and units.Sellers start bidding on the orders at this phase. A bid includes price,units and minimum wholesale units. Price is valid only when enoughorders meets the minimum wholesale units. Bidding by seller in thisphase attracts more buyers to join the trading cycle and submit neworders. If a seller puts a bid to sell a product at a wholesale pricefar below retail price, more buyers will be interested to submit ordersin this phase.

In seller phase 230, buyers' ordering process is frozen. Only sellersparticipate in this phase. Bids are ordered based on price andsubmission date. When seller phase finishes, facilitator matches orderqueue and bid queue to find the matches between orders and bids. A cut330 is done in both orders queue and bids queue. Successful orders andbids are sent to both buyers and sellers. Sellers will then work on saletransaction. Unsuccessful orders are converted to requests until nexttrading cycle starts.

FIG. 4 summarizes the activities of buyer, seller and facilitator in thethree different phases.

EXAMPLE WITH NARRATIVE DESCRIPTION

The buyer oriented on-line reverse auction system is hosting a tradingcycle for product Sony S60 Digital Camera at retail price $100. Thebiding cycle starts on Oct. 29, 2004 and ends on Nov. 4, 2004. PhasesStart End Buyer Phase Oct. 29, 2004(Friday) Nov. 02, 2004 (Tuesday)Buyer Seller Nov. 03, 2004(Wednesday) Nov. 03, 2004(Wednesday) PhaseSeller Phase Nov. 04, 2004(Thursday) Nov. 04, 2004(Thursday)

The days are selected to benefit all parties in the system. Buyers spendweekend and beginning of the week to research products and make buyingdecisions. Sellers start to bid in the middle of the week. On Friday,they can ship the product out after the trading cycle ends. Obviously,different trading cycle can be selected depending on product popularity.

In buyer phase, requests are ordered by price threshold descending anddate ascending. The system assigns buyer a position number at the timethe request is submitted. Position will change in both buyer phase andbuyer seller phase. The position will be fixed at the end of buyerseller phase when new orders are not accepted. From the table below, wecan see Scott submitted a request on Oct. 30, 2004. He wanted onedigital camera at $95. The request expires on Dec. 1, 2004. Mikerequested two digital cameras. It could happen that he may just get oneafter the trading cycle if not enough units are offered at $90. PositionBuyer Price Units Submission Date Expiration Date 1 Scott 95 1 Nov. 01,2004 Dec. 01, 2004 11:00 AM(MON) 2 Dan 90 1 Nov. 01, 2004 Nov. 05, 200409:00 AM(MON) 3 Mike 90 2 Nov. 02, 2004 Nov. 05, 2004 10:00 AM(TUE) 4Jennifer 85 1 Nov. 01, 2004 Dec. 01, 2004 07:55 AM(MON) 5 Chris 85 1Nov. 01, 2004 Dec. 05, 2004 08:00 AM(MON)

In buyer seller phase, positions are fixed for buyers who submittedrequest in buyer seller phase. A bid to sell three cameras at $90 comesin. The system compares the bid with the orders. Apparently, we havethree winning buyers already. Scott, Dan and Mike will be the firstthree in the queue to get the camera. They are guaranteed to have theorder filled. Seller Bid Minimum Position Queue Price Units DateWholesale Units 1 AB 90 3 Oct. 02, 2004 3 Electronics

In buyer seller phase, even if Chris raised price to $95, it would nothelp him to get the camera. Since the positions are fixed for all therequests submitted in buyer phase. This is to protect buyers who haveplaced requests earlier. But Chris will get better position than neworders which are submitted in buyer seller phase. Chris really wants toget the camera this week, so he raised the price to $95. Buyer RequestPosition Queue Price Units Submit Phase Submission Date 1 Scott 95 1Buyer Nov. 01, 2004 11:00 AM(MON) 2 Dan 90 1 Buyer Nov. 01, 2004 09:00AM(MON) 3 Mike 90 2 Buyer Nov. 02, 2004 10:00 AM(TUE) 4 Jennifer 85 1Buyer Nov. 01, 2004 07:55 AM(MON) 5 Chris 95 1 Buyer Nov. 01, 2004 08:00AM(MON) 6 Kate 95 2 Buyer/Seller Nov. 03, 2004 11:30 AM(WED) 7 Tom 95 1Buyer/Seller Nov. 03, 2004 02:00 PM(WED)

In seller phase, more bids come in. The bids are sorted based on priceand bid date. Here are the bids. Seller Bid Minimum Position Queue PriceUnits Date Wholesale Units 1 AB 90 3 Oct. 02, 2004 3 Electronics 2 CD 936 Oct. 01, 2004 6 Electronics 3 EF 94 5 Oct. 02, 2004 2 Electronics

In this case, AB Electronics will get three orders filled and EFElectronics will get one orders filled. CD Electronics fails the bidbecause there are not enough orders to satisfy the minimum wholesaleunit requirement. Transaction happens only when minimum wholesale unitshave matching orders.

This is the final match after seller phase: Buyer Position Queue SellerQueue Final Price Units 1 Scott AB Electronics 90 1 2 Dan AB Electronics90 1 3 Mike AB Electronics 90 1 3 Mike EF Electronics 94 1 5 Chris EFElectronics 94 1 6 Kate EF Electronics 94 2

At the beginning of next cycles, the remaining orders will be changed torequests. Buyer queue is reordered based on price and submission date.Buyers can add, modify or remove the request. Position Buyer Price UnitsDate 1 Tom 95 1 Nov. 03, 2004 02:00 PM(WED) 2 Jennifer 85 1 Nov. 01,2004 07:55 AM(MON)Benefits of the Invention

Buyers

Everybody has a shopping plan for the next week, month, year or evencouple of years. Once user finishes researching and decides what productand brand to buy, buyer starts shopping around for the best price. Thisis where some buyers save a lot of money while some other buyers justpick up the product from nearest store at most expensive price. Withthis system, buyers just set the desired price and sit and watch sellersbiding with each other to give buyers the lowest price. The more buyersare interested in the same product, the lower price it would be.

Sellers

Sellers have to deal with marketing everyday. How to find buyers isalways the most important task for sellers. With this method andapparatus, sellers have access to a large buyer orders' pool. Sellers donot face inventory problems. When bid cycle is over, sellers orderproducts from factories or distributors and distribute to buyersdirectly. Even factory itself could work as a seller in the system.Depending on the size of order, the factory decides how many products toproduce in each trading cycle. Another interesting example is forairlines. Airline companies bid on traveler's plan and decide airplaneschedules. Airplane will always be fully occupied. Schedules with notenough interests could be cancelled to save cost. Hotel can also use thesystem to offer last minutes discount to interested buyers.

1. A method for using a computer to facilitate transactions between atleast one of a plurality of buyers and at least one of a plurality ofsellers, comprising: setting up substantially continuous trading cycleswith predetermined time period for a product; receiving a requestcomprising of request price, number of units, expiration date from saidbuyer during said trading cycle; receiving a bid comprising of bidprice, minimum wholesale units, maximum available units from said sellerduring said trading cycle; matching a plurality of orders from saidbuyers with a plurality of said bids from said sellers with matchingcriteria; establishing transactions on matching said orders and saidbids at the end of said trading cycle.
 2. The method of claim 1 furthercomprising: providing means for searching said product by usingdistinguishable product features whereby said buyer and said seller areordering and biding on the same or substantially the same said product.3. The method of claim 1, wherein said trading cycle comprising: buyerphase wherein providing means for buyer to submit, modify and removerequest.
 4. The method of claim 1, wherein said trading cycle furthercomprising buyer seller phase wherein converting requests from saidbuyer phase into orders, providing means for buyer to increase saidrequest price and number of said units for said order, providing meansfor said seller to place said bid on said orders.
 5. The method of claim1, wherein said trading cycle further comprising: seller phase whereinproviding means for said seller to place said bid.
 6. The method ofclaim 1, wherein said a plurality of requests are sorted with sortingcriteria whereby request with higher said request price, more saidunits, earlier submission date gets better position in request queue. 7.The method of claim 6, wherein said request sorting criteria comprising:each said request having a discrete position of a finite number; saidrequest with higher request price having lower position number; saidrequest with the same request price but earlier submission date havinglower position number.
 8. The method of claim 7 wherein said positionchanges during said buyer phase depending on changes of said requests,whereby submitting, modifying and removing said requests results inresorting of request queue.
 9. The method of claim 7 wherein saidposition set at the end of buyer phase stays the same during said buyerseller phase and said seller phase whereby positions are protected forsaid requests submitted in said buyer phase.
 10. The method of claim 7wherein said position for new orders during said buyer seller phasechanges depending on changes of said new orders whereby submitting,modifying new orders affects the positions of other said new orderssubmitted during said buyer seller phase.
 11. The method of claim 1,wherein said a plurality of bids are sorted with bid sorting criteriawhereby bid who with lower said bid price, less minimum wholesale unitsrestriction, earlier submission date gets better position in bid queue.12. The method of claim 11, wherein said bid sorting criteriacomprising: each said bid having a discrete position of a finite number;said bid with lower bid price having better position number; said bidwith same bid price but lower minimum wholesale units having betterposition; said bid with same said bid price, same said minimum wholesaleunits but earlier said submission date having better position number.13. The method of claim 1, wherein said matching criteria comprising:the first bid in said bid queue is said to have match found when thereare enough unmarked requests to satisfy said minimum wholesale unitsrestriction and said bid price; wherein upon finding a match, bid queuemarks success bid and the matching requests and continues with the nextbid in said bid queue to find a match and wherein no match found, bidqueue continues with the next bid in said bid queue to find a match. 14.The method in claim 1, wherein said establishing transactionscomprising: closing said marked request with matching said bid in saidtrading cycle; sending payment notice to said buyer with said closedrequests; accepting payment from said buyer and forwarding payment withshipping notice to said seller.
 15. The method of claim 1, furthercomprising: continuously executing a computer program to schedule nextsaid trading cycle after said trading cycle ends.
 16. The method ofclaim 1, further comprising: continuously executing a computer programto remove successful or expired orders from said order queue and movesaid order queue to said request queue in said next trading cycle,whereby said next trading cycle starts with said requests that are notfilled and not expired.
 17. An apparatus for facilitating transactionsbetween at least one of a plurality of buyers and at least one of aplurality of sellers comprising: a storage device; and a processorconnected to the storage device, the storage device storing a programfor controlling the processor, the processor operative with the programto provide a buyer interface to receive said requests from a pluralityof said buyers; provide a seller interface to accept said bids from aplurality of said sellers; match a plurality of buyer requests with aplurality of seller bids; complete transaction by sending paymentnotices and shipping notices.
 18. The apparatus as claimed in claim 17,wherein said buyer interface provides information comprising productspecification, review and price trend chart.
 19. The apparatus asclaimed in claim 17, further comprising a program to continuouslysetting up said trading cycles.
 20. The apparatus as claimed in claim17, further comprising a program to continuously remove successful orexpired orders from said order queue and move said order queue to saidrequest queue in said next trading cycle.